Supply Chain Disruption or Competitive Edge? Choose Wisely

How Tariffs Pave the Way for New Markets, Resilience and ReGlobalization

Supply chain disruption and supply chain opportunity are two sides of the same coin.

That’s what so many people miss about President-elect Donald Trump’s tariff, trade and economic policies. His use of tariffs will have positive and negative effects for different countries. Without a doubt, they will result in upheaval of supply chains.

And within that supply chain chaos lies unlimited opportunity. That goes for virtually every company involved in the six mega-processes of supply chain (plan, buy, make, move, distribute, sell). Logistics companies, 3PLs, transportation companies, manufacturers and more have plenty of chances to capitalize on ReGlobalization.

I point this out in parts of my newest white paper, “ReGlobalization – Redefining Global Supply Chains.” Companies must adjust their operations to keep costs low and service high. Not to mention navigating regulatory complexities and geopolitical uncertainties.

Let’s take a look at the bevy of potential opportunities that await.

Storage and Retrieval – The 3PL Opportunities

Whatever combination of Xshoring (nearshoring, reshoring and friendshoring) you choose, ReGlobalization will increase demand for strategically placed warehouses.

3PLs can provide a solid assessment and strategic feasibility analysis so executive teams know which path to follow and where this warehousing is needed.

This will be necessary whether your enterprise needs eCommerce fulfillment, store replenishment, component supply for original equipment manufacturing (OEMs) and more.

Companies are going to require scalable and dynamic storage solutions to manage fluctuating tariffs and trade routes. And efficient ways to retrieve from that storage.

I know 3PL space is currently an issue in Mexico. However, the country has developed nearly 25 million square meters of industrial space in the last three years. The nation plans another 30 million square meters in the next five years.

That’s on top of the 80 million square meters of current industrial space. That opens the door for a lot of 3PL warehousing.

And Mexico has stronger protections for intellectual property than other nations, particularly China.

Managing All that Movement with Fourth-Party Logistics (4PLs)

This is one of my colleague Mike Royster’s favorites. Mike, CEO of Tompkins Ventures, calls it managed transportation or a guardian service, where a 4PL sits atop your 3PLs, freight forwarders – your entire transportation network.

Businesses must restructure supply chains to reduce reliance on tariff-affected countries. Your 4PL/guardian service (contact us if you don’t have one) will play a critical role in supply chain redesign.

A 4PL/guardian service can offer tools to provide visibility and control. Their knowledge and networks can help companies diversify supplier bases to mitigate risks from trade policy changes.

New Waters for Ocean Cargo to Avoid Disruptions

As the white paper notes, China is not going anywhere. Countries will trade with the current factory of the world for a long time, if not forever.

But tariffs are pushing companies to explore alternative markets. This will create demand for routes outside traditional Asia-to-North America and Europe corridors.

Goods and components produced in Central and South America will be shipped by ship to North America. Goods and components produced in Africa will also travel by ship to the Americas and Europe.

And as I have pointed out before, South America and Africa have abundant raw materials to fuel the modern world.

Ocean cargo companies can take advantage of growth in non-containerized and bulk shipping to regions that produce these raw materials in response to tariff pressures.

New Routes Mean New Transportation Opportunities

Companies are looking to shift supply chains to avoid regions that likely will have higher tariffs imposed on them. Beyond the changing ocean routes noted above, this will create demand for new trucking routes, rail corridors and multimodal transportation solutions.

Reshoring and nearshoring will increase the need for domestic freight services, benefiting trucking and rail companies.

For reshoring, increased warehousing closer to final destinations (B2B, retail or eCommerce) will reduce reliance on long-haul routes. On the other hand, that will create new opportunities in regional and last-mile transportation.

Additional, Friendlier Skies for Air Cargo

In transportation, shipping via ocean is always least expensive. Shipping by rail is more expensive. Shipping by truck adds more costs, and you generally should avoid shipping by plane – air cargo is the most expensive.

With ReGlobalization, new production and logistics hubs in Latin America, Africa and other parts of Southeast Asia will come online. Yes, most new production and logistics hubs will try to use less expensive shipping methods.

But the key word here is “new.” Diversified supply chains offer air cargo companies the chance to expand their networks. Because there always comes a time when a customer needs a rush order, or speed is more important than cost.

The Dominican Republic exemplifies how ReGlobalization will add opportunities. I have written extensively about how the Caribbean nation can become the Singapore of the West. And it’s so close to the eastern United States that it can provide two-day eCommerce service to 60-70% of the U.S. population. Therefore, air cargo companies can capture much of that market’s continued double-digit growth.

For example, consider the following scenario for Dominican Republic support for eCommerce fulfillment:

• Jane from New York City places an order at 6 p.m. on a Monday.
• In a Dominican Republic free trade zone, a warehouse picks and packs Jane’s order by midnight Monday.
• An air container including Jane’s order leaves the Dominican Republic at 5 a.m. Tuesday and arrives at 10 a.m. in New York City.
• Jane’s order is transported to the delivery terminal by 7 p.m. Tuesday.
• Jane’s order is loaded for delivery at 3 a.m. Wednesday.
• Jane receives her delivery before 4 p.m. Wednesday.

Tariffs also could force companies to shift to smaller, higher-value shipments. The higher the value, the more justification for the additional transportation costs of air cargo.

Supply Chain Finance Can Unlock Growth

Supply chain disruptions cause longer payment cycles. Modern supply chain finance releases these outstanding payables, injecting liquidity into supply chains.

This is particularly important with suppliers in the new and emerging markets that ReGlobalization will unlock. Tight cash flow could prevent them from capitalizing on the growing number of deals headed their way.

Supply chain finance companies could grow exponentially by helping those small and medium-sized enterprises take advantage of ReGlobalization.

The Critical Path to Customs Compliance

New tariffs and new markets demand heightened regulatory enforcement and complexity. Handling evolving tariff schedules and customs declarations increases risk.

Customs compliance companies who leverage artificial intelligence (AI) and machine learning (ML) can capitalize on those opportunities. The right platform should automate data extraction from invoices and bills of lading, ensuring accuracy and reducing manual errors.

Working with partners on preclearance programs can also minimize delays.

The right customs partner minimizes risks like fines or shipment delays. You can get on with the business of ReGlobalization. Meanwhile, your customs compliance company can offer expertise in trade compliance and handle the paperwork. 

The Right Tech and Tools for Supply Chain Data Service

Companies need data-driven insights into how tariffs will affect supply chains. Predictive analytics tools and scenario modeling platforms can help.

In fact, as I point out in “ReGlobalization – Redefining Global Supply Chains,” Tompkins Ventures offers a Dynamic Supply Chain Optionality (DSCO) tool. This tool continuously monitors, calibrates and upgrades your global supply chain to address political upheaval, weather events, competitor actions, economic shifts – or something unforeseen.

Deploying such artificial intelligence and machine learning can help you stay on top of perpetual disruption. Real-time tracking and advanced analytics offer you end-to-end supply chain visibility. Autonomous solutions can navigate many supply chain challenges.

The right digital technologies only upgrade serious supply chain issues for human intervention. If a shipment is 30 minutes late, your AI and ML systems should be able to handle it.

However, natural disasters, wars and complete port closures might require new supply chain strategies. That’s when humans step in and use the DSCO tool to alter your ReGlobalization plan.

ReGlobalization at Your Service

These are just a few of the opportunities available. In fact, now is the most critical time in the history of supply chain – and undoubtedly one of the most exciting. Company executives and supply chain leaders can see tariff-driven disruptions as a problem. Or they can see a path forward to competitive advantage.

At Tompkins Ventures, we offer a complete suite of ReGlobalization services and tools. Our Dynamic Supply Chain Optionality (DSCO) platform helps you navigate disruption and seize emerging opportunities. Whether it’s redesigning your supply chain, diversifying suppliers or implementing cutting-edge technology, we provide the expertise and resources to help you succeed.

Contact us now. Let us guide you in turning supply chain disruption into innovation, diversification and resilience.

Related Reading

• ReGlobalization: Supply Chains in a Trump Disrupted World
• 6 Strategies to Surf Through the Trump Tariff Tsunami
• Why Dynamic Optionality Rules the Future